{photo of Little Otsu, a shop in San Francisco- from a past Modish shop tour}
Selling your work wholesale or on consignment is often the next step for independent artists and designers- it can help you expand your business and sell more and it's pretty cool walking into your favorite little boutique to see your items sitting on the shelf next to all the other pretty things. So, where to begin?
First, let's start with consignment: (wholesale info is here!)
To sell your goods on consignment means that you get paid by the shop only upon the sale of your items- essentially, you retain ownership of your items until they sell, the store does not buy them outright. This is often the easiest way to get your products into a store and is a good first step if you're just starting out.
Consignment is beneficial for shop owners and designers alike: it allows shop owners to fill their shops with items at no upfront cost to them and lets them test out the saleability of your goods to their customers. For you, it's beneficial as you retain a higher % of the sales price on your items than you would selling via wholesale (or, you should!) while also testing our your saleability in different markets, and getting exposure in retail shops.
You pay the shop a commission on the sale of your items, as they are working to help market, display and sell your items in the best way possible.
The Consignment Agreement:
When you enter into a consignment relationship with either an online or brick and mortar shop, you need to make sure you receive a consignment agreement from the shop. This should outline:
- Inventory:
Generally, the agreement includes an inventory sheet of all the items that you are placing on consignment with the shop- it should list the item quantities, descriptions and retail prices. - Sales split:
When your item sells, the shop owner will retain a certain % of the sales price of your item, and you will receive payment for the remainder. The most typical consignment split is 60/40, with the designer/seller/you retaining 60% of the sales price and the shop getting a 40% commision. I've also seen 70/30 and even some 80/20 splits (in favor of the designer) but 60/40 is standard and worth it if the shop owner is doing their job well in promoting and selling your goods.
I've also seen 50/50 quoted, which is standard for wholesale, but honestly I don't think that's fair for a consignment split- I say, stick with 60/40 or better. - Payment schedule:
The agreement should explicitly state when you can expect to be paid for work that has sold. Often, payments are made by the shops every month for all sales that occurred the month prior. You should also know how you will get paid (via check? paypal? cash in store?) and you should expect to receive a list of items that have been sold along with your payment. - Duration of consignment:
The agreement should state how long the shop will leave your items up on the shelf (real or virtual) in an attempt to sell them. If nothing has sold within this amount of time, it's the shop's prerogative to return the items back to you.
You should also be able to pull your items from the shop and have them returned to you whenever you'd like, as technically, you still own them- remember that. You don't want your items collecting dust on the shelves for too long and if they haven't sold after a period of time, then perhaps it's not the right market for you anyway.
**You can download an actual consignment agreement from my old online shop here: Download Modish Handmade Consignment agreement just to give you an example. Some agreements will be much more detailed, but this is a basic outline of what you should expect to see.
Some other information that may not be detailed in the agreement, but you need to make sure you ask about upfront is:
- Shipping costs:
For out of town/online consignment, it is generally the designer's responsibility to pay for shipping costs to the shop, and generally the shop's responsibility to pay for shipping costs back to the designer if the work doesn't sell. It's always best to ask the shop their policy upfront though. - Loss/damage:
It is generally the responsibility of the shop to assume the loss for stolen/lost property or items that are damaged by shop/customer error- make sure you ask up front though!
If damage occurs due to faulty workmanship on the designer's end (a clasp falls off one of your necklaces, per se) then responsibility for that loss generally lies with you.
Of course, terms differ from shop to shop and it's your responsibility to find them out before you enter into any agreements or entrust your items to a shop on consignment.
I've seen some designers run into problems with consignment- there are shady shop owners, unsold items that are never returned, unsold items that are returned in an unsaleable condition, etc. Perhaps I'll get into some of the pitfalls and things to watch out for with consignment in a future post, if that seems to be a big concern? If you have specific questions or experiences to share, please leave them in the comments below. And are there any other consignment related topics you'd like to see addressed?
Tomorrow I'll outline wholesale basics in much the same way (sorry I switched it up on you- seemed more appropriate to discuss consignment first! :) See you then!
